The global market for honey is set to grow significantly according to industry analysts, as consumers become more health conscious. However, supply of the healthy, natural sweetener is lagging behind production as farmers shy away from keeping bees. Honey Care Africa hopes to change this by helping smallholder farmers in rural Kenya and South Sudan to overcome their fear of bees and invest in this potentially profitable venture.[hidepost=9][/hidepost]
The firm’s founder Farouk Jiwa and chief executive Madison Ayer tell How we made it in Africa about the growing demand for honey and why selling to local markets as opposed to in the US is more lucrative.
What was the inspiration behind Honey Care Africa?
Jiwa: When I was studying Environmental Biology at university, it became clear to me how big the tension between people and the environment was. I figured there has to be an economic activity which could be environmentally positive and commercially viable. We started looking at economic activities around forests or parks that enhance biodiversity and positive environmental values. Beekeeping shot up to the top of the list.
The problem was that in Kenya and most African countries, beekeeping has been done in a very traditional way. In the 1960s, Kenya made a mistake by adopting the top-bar hive – no country that has [produced honey] at scale uses this method. We introduced the Langstroth bee hive which farmers keep about 250 metres away from home. The hive is approximately three metres off the ground and is easier to manage, especially for women.
It has been 14 years since you started the business. Has it lived up to your initial expectations?
Jiwa: Yes and no. We have been successful in many ways [like] helping to make beekeeping an attractive activity. About 40% of our beekeepers today are women. In the past, men owned an entire value chain because it was undignified for women to climb trees. The introduction of the technology was a good thing, but I think we were ahead of time by about five years. If we had the kind of support that I see social venture funds offering today, we would be doing a lot better.
What are you doing to address your failures and improve performance?
Ayer: We have had to refresh the culture and the economic model and re-evaluate the industry. When I joined in 2010, we began looking at the fundamentals of the economics which we believed were mere assumptions that did not hold any longer. We looked at what it would take to get to profitability and sustainability.
The mission of Honey Care is to work with smallholder farmers to produce honey as an income stream. To make economic sense, we need to have a certain level of scale in production. In the honey industry, supply is the constraint; it is a natural product and cannot be produced in the factory. Demand is growing around the world for honey because it is one of the healthiest sweeteners, but supply is actually declining.
I learnt very early on that most people are afraid of bees. We were giving farmers training and the hive tools but they were not harvesting honey because the hives were not being maintained properly. We have since reorganised the system and built a dedicated hive management team. Farmers own the hives and generate the income but they do not have to conduct most of the inspection, harvesting and general management of the hives. We currently have 20 hive technicians and we are in the process of expanding this model. We have invested more than US$1m in the last 18 months into expanding these field operations. We have about 5,000 active farmers. In the last two months we have generated about three tons of honey from our field operations which we sell in Nairobi and Mombasa.
Honey Care previously sold in the US. Why the change of strategy?
Ayer: Consumer markets in the US are unforgiving: regulations are high, distribution structures are sophisticated and very costly for the producer, and the supply chain is unforgiving. If you miss something that was supposed to be on the label or the packaging arrives and a few jars are leaking, you get kicked off the shelf. For a small Kenyan-based organisation, managing this global supply chain with such precision is impossible. The market here in Nairobi is much more exciting: growth is higher, [profit margins are] higher and the growth will continue because of the emerging middle class. The honey market in Kenya is big – there is a major imbalance of domestic production and consumption. Right now, about 80% of honey sold in Kenya comes from Tanzania.
What challenges do you face?
Ayer: Most people want to own a bee hive because it is a status symbol in rural areas and an income stream. However, the cost of a bee hive is out of reach for most rural households – KSh 5,000 ($57) for one bee hive. If managed well, one bee hive will produce KSh 5,000 in honey per year and will last for 10 years. Financing is very important, but unfortunately, any form of rural agricultural financing is still fragmented. We are partnering with online lending platform Kiva to solve this problem. Other challenges we face include poor infrastructure and erratic weather patterns.
What are your future plans?
Ayer: We are already taking Honey Care to South Sudan. There is remarkable opportunity for honey production there… However, our main focus is Kenya and modernising the production here. Ultimately our plan is to have 100,000 bee hives in Kenya that we are actively involved in. We would love to see every kid in Kenya have a serving of honey every morning before going to school.
You are involved in two agricultural ventures in Kenya. Why agriculture?
Ayer: I built two businesses in the US and I have been able to step out of their daily operations. Solving consumer financial problems for American consumers may be good business but it is probably not the most holistic. Money is not everything. I was really interested in getting involved in more fundamental challenges. I did my assessments and at the core of everything was poverty; the poorest people in the world are smallholder farmers. Even though I knew nothing about agriculture, I had to jump into it.
Any advice for other entrepreneurs?
Ayer: Reality is so important. Be a dreamer but think and act in reality. Don’t let too much idealism prevail over what is actually happening on the ground. People are also critical to any business. You must have decent systems and tools that people can use.